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SPOTLIGHT: Do Goldman Sachs' calls drive copper prices?

Goldman's recent advisories on copper have called the market accurately... or have they driven it?

Correlation does not imply causation.

Yet those caught on the wrong side of Goldman
Sachs’ recent base metals investment advice
will surely be feeling that the global investment bank holds
more than a marginal influence over the direction of the copper
market.

The bank’s recent announcements have caused
shockwaves in the metals market, and if the immediate price
movements that followed its statements are a reliable
indicator, then Goldman has been calling the market right.

Goldman is now back in the long
copper game and the market rallied 3.1% in the two days
that followed, but it remains to be seen whether the flagship
base metal will return to the form of late 2010, as Goldman
believes it will.

Whichever way they are betting, in addition to currencies,
production figures, macroeconomics, China, interest rates and
the direction of the wind, some traders are clearly paying
attention to how the investment bank is calling the market.

By the end of last week, the torrential rain that started surging through northern Chile on Tuesday was moving northeast into the Amazon basin, away from the global heartland of the copper mining industry.